Search found 3816 matches

by alex_686
Sat Oct 20, 2018 10:05 am
Forum: Investing - Theory, News & General
Topic: DFA small value... acitve management?
Replies: 21
Views: 839

Re: DFA small value... acitve management?

does this not sound like active management? I've been a strong proponent of small value investing but am starting to wonder if over time it's just turned into another "active strategy"? It seems like they keep "fine tuning" it/throwing in new factors ie profitability/liquidity etc etc, doesn't seem...
by alex_686
Sat Oct 20, 2018 10:02 am
Forum: Investing - Theory, News & General
Topic: DFA small value... acitve management?
Replies: 21
Views: 839

Re: DFA small value... acitve management?

The S&P500 has added 16 companies this year, and 26 in 2017. Are Standard and Poor's active managers? Yes, they are! The S&P 500, 400, and 600 are managed by a committee of people using a rules based methodology not strictly market capitalization. The gory details are here: https://us.spindices.com...
by alex_686
Fri Oct 19, 2018 5:49 pm
Forum: Investing - Theory, News & General
Topic: What happens if a government confiscates foreign-held stocks?
Replies: 30
Views: 1559

Re: What happens if a government confiscates foreign-held stocks?

And then China and the US suffer the consequences of war, both of their stock markets drop, and those of us who own euro stocks win. A case for diversification.
by alex_686
Fri Oct 19, 2018 1:40 pm
Forum: Investing - Theory, News & General
Topic: Why is dividend yield a part of expected future returns
Replies: 15
Views: 1041

Re: Why is dividend yield a part of expected future returns

As a counter example I will point towards REITs, where the majority of return comes from dividends, not capital apperiations. The real answer is that Total Return Calculations are a generic calculation designed to handled dividend paying stocks, non-dividend paying stocks, REITs, real estate, bonds,...
by alex_686
Thu Oct 18, 2018 6:37 pm
Forum: Investing - Theory, News & General
Topic: What do index funds do when firm's market cap drops?
Replies: 17
Views: 1332

Re: What do index funds do when firm's market cap drops?

When people automatically reinvest dividends, does that transfer money paid by dividend paying companies in the index into company XYZ, inflating it's price? I'm curious if non dividend paying companies benefit in any way from the dividend paying companies in their index due to automatic reinvestme...
by alex_686
Thu Oct 18, 2018 5:50 pm
Forum: Investing - Theory, News & General
Topic: What do index funds do when firm's market cap drops?
Replies: 17
Views: 1332

Re: What do index funds do when firm's market cap drops?

To add a bit to JoMoney's post, yes dividends are reinvested back into the index. This is important. When a company.issues a dividend its market cap drops. You have to reinvest the dividend to keep the index at market cap. A good example - IIRC - is back during the 90s when Microsoft issued a specia...
by alex_686
Thu Oct 18, 2018 5:42 pm
Forum: Investing - Theory, News & General
Topic: Tilting One More Step Beyond USA vs non-USA
Replies: 14
Views: 1103

Re: Tilting One More Step Beyond USA vs non-USA

But once you start tilting why stop? USA is best. OK. Why not the best of USA? For me best of USA is Warren Buffett. For me BRK is a managed mutual fund managed by the best money manager the USA has ever known. BRK has no expense ratio. And it's structure allows it to avoid paying dividends which f...
by alex_686
Thu Oct 18, 2018 11:54 am
Forum: Investing - Theory, News & General
Topic: Tilting One More Step Beyond USA vs non-USA
Replies: 14
Views: 1103

Re: Tilting One More Step Beyond USA vs non-USA

IIRC if a non-USA domiciled stock wants to list on a major US exchange it needs to be put into "bag" called an ADR (American Depository Receipt). It is much more complicated than this. You have the country of domicile, country of headquarter, and country of primary exchange (i.e., primary regulator...
by alex_686
Thu Oct 18, 2018 11:00 am
Forum: Investing - Theory, News & General
Topic: Tilting One More Step Beyond USA vs non-USA
Replies: 14
Views: 1103

Re: Tilting One More Step Beyond USA vs non-USA

USA domiciled means bought from a USA stock exchange. Non-USA domiciled means bought on a non-USA stock exchange. Nope. There are plenty of foreign companies that trade on US exchanges. Next - what do you mean by cheaper and why does it matter? I invest to get the highest return for the lowest risk...
by alex_686
Thu Oct 18, 2018 9:34 am
Forum: Investing - Theory, News & General
Topic: Help me understand dividends
Replies: 119
Views: 10093

Re: Help me understand dividends

How does that change though if the dividends are paid out of a mutual fund? The dividend would be reinvested in many companies, not just the one that paid the dividend. So, lets go back to the start. A foundational bit of investment theory is the Miller Modigliani Dividend Policy Irrelevance Theore...
by alex_686
Wed Oct 17, 2018 9:57 pm
Forum: Investing - Theory, News & General
Topic: Help me understand dividends
Replies: 119
Views: 10093

Re: Help me understand dividends

So my total dollar amount doesn't change, but my number of shares increase and I have "more" of the company Yes and more potential for growth. No to maybe. You are assuming the company has good prospects. There are a fair number of "zombie" companies out there. Their earnings are either stagenet or...
by alex_686
Tue Oct 16, 2018 8:56 pm
Forum: Personal Consumer Issues
Topic: Why buy thicker hardwood?
Replies: 16
Views: 2153

Re: Why buy thicker hardwood?

The thicker the hardwood, the more times it can be refinished. You have a better chance of buffing out any scratches and gouges.
by alex_686
Tue Oct 16, 2018 7:22 pm
Forum: Investing - Help with Personal Investments
Topic: Hoping for clarification on bond fund questions
Replies: 6
Views: 614

Re: Hoping for clarification on bond fund questions

There are flavors of duration that measure interest rate risk. The duration posted by funds is the average cash flow in years. Technically the one posted by fund does not measure interest rate risk, but the values between the 2 are pretty close.
by alex_686
Tue Oct 16, 2018 4:47 pm
Forum: Investing - Help with Personal Investments
Topic: "MegaMillions and Powerball jackpots combined are now $1B" - Good investment?
Replies: 55
Views: 2711

Re: "MegaMillions and Powerball jackpots combined are now $1B" - Good investment?

“Investment” You used that word twice. There is no “investment” here. There is an entertainment purchase. Perhaps you could even stretch the word “speculation” to cover this. But not investment. Expected return is zero. IIRC the expected return is about $.60 on the $1.00. So not a high return, or e...
by alex_686
Tue Oct 16, 2018 9:55 am
Forum: Investing - Theory, News & General
Topic: Is EMH a tautology?
Replies: 108
Views: 4623

Re: Is EMH a tautology?

The efficient market hypothesis, on the other hand, is a theory that makes predictions not about the market portfolio as a whole but about the speed and completeness with which the market prices individual assets based on available information. EMH is more focused only on the cross-section of stock...
by alex_686
Tue Oct 16, 2018 9:40 am
Forum: Investing - Theory, News & General
Topic: Is EMH a tautology?
Replies: 108
Views: 4623

Re: Is EMH a tautology?

There are a couple of basic tenets that make EMH superfluous to the Boglehead way... 1) Participants in large publicly traded stock markets are very good at comparing the immediate value and prospects of competing stocks/firms relative to one another. 2) Diversification is a free lunch for stocks, ...
by alex_686
Mon Oct 15, 2018 3:22 pm
Forum: Investing - Theory, News & General
Topic: Is EMH a tautology?
Replies: 108
Views: 4623

Re: Is EMH a tautology?

In fact even Fama thinks that the momentum effect makes EMH very dubious, since one would need a particular crazy asset pricing model to justify the quickly shifting risk in momentum stocks. I saw a video in which Fama joked that he hopes that the momentum effect goes away, so that EMH will become ...
by alex_686
Mon Oct 15, 2018 3:13 pm
Forum: Investing - Theory, News & General
Topic: Is EMH a tautology?
Replies: 108
Views: 4623

Re: Is EMH a tautology?

Uh boy... A major implication of the theory is that a diversified low-fee portfolio--with no "information cost"--will beat stock picking. Hence, the chance of picking an undervalued stock is essentially random...and keeping trading to a minimum would be the way to go. You're still not getting it: t...
by alex_686
Mon Oct 15, 2018 2:56 pm
Forum: Investing - Help with Personal Investments
Topic: Exchanging VT total world stock for VTI & VXUS
Replies: 14
Views: 795

Re: Exchanging VT total world stock for VTI & VXUS

Regarding the thread you link to: given 2017 evidence either (1) The posts by Tyler Aspect appear to be confirmed, or else (2) we do not fully understand the law and its applicability, or (3) Vanguard is breaking US law. Right? I'm curious if alex_686 can chime in here on the regulatory/tax questio...
by alex_686
Mon Oct 15, 2018 2:49 pm
Forum: Investing - Help with Personal Investments
Topic: Exchanging VT total world stock for VTI & VXUS
Replies: 14
Views: 795

Re: Exchanging VT total world stock for VTI & VXUS

There will be minuscule divergences due various things like to differences in expense rations or differences in other expenses or income such as trading costs, portfolio lending income, taxation of fund dividends internally etc. Plus any changes in the capital structure. IPOs, dividends, stock buy ...
by alex_686
Mon Oct 15, 2018 12:12 pm
Forum: Investing - Help with Personal Investments
Topic: Exchanging VT total world stock for VTI & VXUS
Replies: 14
Views: 795

Re: Exchanging VT total world stock for VTI & VXUS

Short term yes, long term no. The ratios between the 2 are not fixed and do change. Well, maybe drift would be a better word.
by alex_686
Sat Oct 13, 2018 6:36 pm
Forum: Investing - Theory, News & General
Topic: Is EMH a tautology?
Replies: 108
Views: 4623

Re: Is EMH a tautology?

The irony of the Nobel for Prof. Fama and EMH, is Prof. Shiller receiving a Nobel for CAPE at the same time. The Nobel committee often balances its prizes in just that way. Btw Shiller did not receive his Nobel for CAPE10 And I will ask what is the contradiction between EMH and CAPE? CAPE makes no ...
by alex_686
Sat Oct 13, 2018 6:33 pm
Forum: Investing - Theory, News & General
Topic: Mutual Fund vs. Brokerage exposure to risk
Replies: 8
Views: 445

Re: Mutual Fund vs. Brokerage exposure to risk

I probably wasn't as clear as I could have been. I wasn't referring to the fund itself going bankrupt, rather Vanguard itself. I wasn't sure how/if a brokerage account changed risk for an individual investor as I had read a few posts from people stating details and reasons why a brokerage was more ...
by alex_686
Sat Oct 13, 2018 2:22 pm
Forum: Investing - Theory, News & General
Topic: Mutual Fund vs. Brokerage exposure to risk
Replies: 8
Views: 445

Re: Mutual Fund vs. Brokerage exposure to risk

If I understand correctly, investments in a mutual fund are held in the name of the customer and investments in a brokerage are held in the name of the brokerage firm. In case of a bankruptcy, investors of traditional mutual funds are "first in line" to receive assets in case of a liquidation and s...
by alex_686
Fri Oct 12, 2018 10:59 am
Forum: Investing - Theory, News & General
Topic: Does it make sense to consider that stocks are 'on sale' when there's a correction?
Replies: 84
Views: 4262

Re: Does it make sense to consider that stocks are 'on sale' when there's a correction?

Preposterous is too strong of a description of the EMH, but the EMH assumes that market participants are rational beings, the biases of any one of whom are cancelled out in the other direction by the other participants. Behavioral finance has shot that down IMHO. I know several with Ph.D.s in finan...
by alex_686
Fri Oct 12, 2018 10:50 am
Forum: Investing - Theory, News & General
Topic: Does it make sense to consider that stocks are 'on sale' when there's a correction?
Replies: 84
Views: 4262

Re: Does it make sense to consider that stocks are 'on sale' when there's a correction?

Stocks are not "on sale" but are actually repriced to reflect a new, slower growth world. So you mean that the growth prospects for European small caps suddenly changed on Wednesday at 3.30 pm (when their price suddenly dropped), and have today improved? We don't need to growth to get lower prices....
by alex_686
Fri Oct 12, 2018 10:41 am
Forum: Investing - Theory, News & General
Topic: Does it make sense to consider that stocks are 'on sale' when there's a correction?
Replies: 84
Views: 4262

Re: Does it make sense to consider that stocks are 'on sale' when there's a correction?

Exactly, Mr Bogle said in the video that Fama and collegues claimed all the credit for index funds, whereas he had never even heard of them when he created his. In other words, my take on it is that to be an indexer you don't have to believe in EMH. I think EMH is pretty absurd, some of the claims ...
by alex_686
Fri Oct 12, 2018 9:38 am
Forum: Investing - Theory, News & General
Topic: Does it make sense to consider that stocks are 'on sale' when there's a correction?
Replies: 84
Views: 4262

Re: Does it make sense to consider that stocks are 'on sale' when there's a correction?

there is no logical inconsistency or contradiction between investing in index funds and also claiming that stocks can be bought "on sale" from time to time. OK, please explain. To restate my position, for stocks to be "on sale" this means one can figure out that the market has mispriced stocks. If ...
by alex_686
Fri Oct 12, 2018 9:33 am
Forum: Investing - Theory, News & General
Topic: Does it make sense to consider that stocks are 'on sale' when there's a correction?
Replies: 84
Views: 4262

Re: Does it make sense to consider that stocks are 'on sale' when there's a correction?

Also, EMH may be the foundation of Bogleheads philosophy, but it has nothing to do with Mr Bogle's decision to create index funds. I saw an interview of him where he says that he didn't even know about EMH at the time. Eh - Bogle is not noted for being a theorist. And does a practitioner need to kn...
by alex_686
Fri Oct 12, 2018 8:52 am
Forum: Investing - Theory, News & General
Topic: Does it make sense to consider that stocks are 'on sale' when there's a correction?
Replies: 84
Views: 4262

Re: Does it make sense to consider that stocks are 'on sale' when there's a correction?

He speaks of the dividend discount theory and rising rates. Yet rates did not rise suddenly overnight to justify the drop on Wednesday morning in US stock prices. Are you sure? Unpack the dividend discount model. The P/E ratio of a stock is driven by the driven by the difference in the "Required Re...
by alex_686
Thu Oct 11, 2018 10:04 pm
Forum: Investing - Help with Personal Investments
Topic: Foreign bonds
Replies: 14
Views: 740

Re: Foreign bonds

I remember interest rate parity from my college days so long ago, so I know currency movements make up for foreign bonds that yield more or less than US bonds, such that all bonds should give an investor the same return (assuming equal quality). I have noticed that with other nations having even lo...
by alex_686
Thu Oct 11, 2018 4:14 pm
Forum: Investing - Help with Personal Investments
Topic: Foreign bonds
Replies: 14
Views: 740

Re: Foreign bonds

I know hedging costs money, but I have no idea how much. Can any of the experts here help me out with a ball park figure in basis points? If Vanguard has taught us anything it's that costs matter, and they matter a lot. The cost in hedging is the difference of yields between the government bonds in...
by alex_686
Thu Oct 11, 2018 3:27 pm
Forum: Investing - Help with Personal Investments
Topic: Foreign bonds
Replies: 14
Views: 740

Re: Foreign bonds

...but with extra trading costs to maintain the currency hedge. FYI, there are no explicit trading costs to FX hedging. Extra hedging costs are about under 5 bps per year for a small fund. And that is for hiring a 3rd party, indirect trading costs, drag, the extra tax preparation. etc. Honestly, no...
by alex_686
Thu Oct 11, 2018 2:48 pm
Forum: Investing - Help with Personal Investments
Topic: Very Basic Asset Allocation Help Needed
Replies: 8
Views: 479

Re: Very Basic Asset Allocation Help Needed

Looking for a very basic AA allocation and some other opinions. I don't have much confidence in myself around this stuff, no matter how many articles I read. As a start, look at some target date funds. These are all in one funds with high quality AA. In theory you should just be able to look up you...
by alex_686
Thu Oct 11, 2018 10:58 am
Forum: Investing - Help with Personal Investments
Topic: Very Basic Asset Allocation Help Needed
Replies: 8
Views: 479

Re: Very Basic Asset Allocation Help Needed

First, there is not much for us to work there. Here is a link on how to ask portfolio questions. https://www.bogleheads.org/forum/viewtopic.php?t=6212 What you really want to do is step back and answer the big questions first, then move on to the asset allocation. What are your goals? How much are y...
by alex_686
Thu Oct 11, 2018 9:45 am
Forum: Personal Finance (Not Investing)
Topic: Mortgage vs. Cash
Replies: 28
Views: 2172

Re: Mortgage vs. Cash

Since Vanguard doesn't offer a fund with duration equal to the 30-year mortgage, I will compare with a 15-year mortgage, which would probably be about 4%. A 30 year mortgage has a duration about 10. Duration is about the average time weighted cash flows. For bonds, most of that is at the end of 10 ...
by alex_686
Wed Oct 10, 2018 9:55 pm
Forum: Investing - Theory, News & General
Topic: Bond Market Index vs Stable Value?
Replies: 6
Views: 690

Re: Bond Market Index vs Stable Value?

I've started building a three fund portfolio and wondering if anyone has ever used the Stable Value fund within their 401k as opposed to an index bond market fund (such as BND or VBMFX)? Although the fund expense is double either of those Vanguard funds, the returns in my Empower SVF are very compa...
by alex_686
Wed Oct 10, 2018 4:24 pm
Forum: Investing - Theory, News & General
Topic: Any natural hedges to stocks?
Replies: 17
Views: 1668

Re: Any natural hedges to stocks?

I would go with direct holdings of real estate. Positive return and a correlation around 0 to stocks. Last point is debatable, but that is where I stand.
by alex_686
Wed Oct 10, 2018 3:34 pm
Forum: Investing - Help with Personal Investments
Topic: When stocks and bonds drop at the same time, what do you do?
Replies: 40
Views: 4431

Re: When stock and bod drop at the same time, what do you do?

What does your IPS state? Personally, mine says to stay pat. Why does this matter? Specifically, what is your risk tolerance? If you have a low capacity to take risks it suggests that you should move into bonds and increase your savings. But that is all about all one can say. It is a complex questio...
by alex_686
Wed Oct 10, 2018 2:15 pm
Forum: Investing - Theory, News & General
Topic: 5 ways target-date funds let investors down
Replies: 38
Views: 3424

Re: 5 ways target-date funds let investors down

Yawn. 1. Some target date funds don't overweight asset classes that I think they should overweight. i.e. small caps. We will ignore this is highly debated. 2 & 3. The great advantage of target date funds is that they are simple. However, target date funds use generic target dates to set allocations....
by alex_686
Mon Oct 08, 2018 3:28 pm
Forum: Investing - Theory, News & General
Topic: Inflation and stocks and bonds
Replies: 14
Views: 741

Re: Inflation and stocks and bonds

Shouldn't we hear, instead, that one should be invested in Treasury Inflation-Protected Securities (TIPS) as a hedge against inflation? No, I don't think so. It is good to think how different types of risk will impact your portfolio. For inflation, bonds have a high risk, stocks have a low risk, an...
by alex_686
Mon Oct 08, 2018 1:09 pm
Forum: Investing - Theory, News & General
Topic: Inflation and stocks and bonds
Replies: 14
Views: 741

Re: Inflation and stocks and bonds

BTW stocks are not an inflation hedge. I will take the opposite side, or at least the side that stocks are a decent hedge. Let us say that we have inflation of 100%. The inputs (raw materials, labor costs) going into the factory go up by 100%, but the output's price also goes up by 100%. If the fac...
by alex_686
Mon Oct 08, 2018 8:56 am
Forum: Personal Finance (Not Investing)
Topic: can i start a private investment firm?
Replies: 70
Views: 5081

Re: can i start a private investment firm?

Ahh the "Beardstown Ladies [investing] club". They had a better track record than all the professionals - until it turned out they had mismeasured their performance. It's one of those classic stories. I have a favorable opinion of the Beardstown Ladies. Average unsophisticated women regularly inves...
by alex_686
Mon Oct 08, 2018 7:38 am
Forum: Investing - Theory, News & General
Topic: Why does Vanguard reccomend 60:40 US:International ratio?
Replies: 52
Views: 7660

Re: Why does Vanguard reccomend 60:40 US:International ratio?

Why does Vanguard reccomend 60% US and 40% International in it's target funds and advisor services? What is the research behind that? Here is a white paper describing the results of Vanguard’s research on this. See figure 3 where it shows that 30-40% non-US stocks minimized variance in their sample...
by alex_686
Sun Oct 07, 2018 12:58 pm
Forum: Investing - Help with Personal Investments
Topic: Investing Philosophy
Replies: 11
Views: 965

Re: Investing Philosophy

I think this is a decent aspirational plan. 2 notes. First, investing is a pragmatic practice, not dogmatic. For example, why no sales? This implies no rebalacning. Second, and building off the first point, this is a action plan, not a philosophic investment. Investing philosophy should be why you t...
by alex_686
Sun Oct 07, 2018 11:28 am
Forum: Investing - Help with Personal Investments
Topic: Management fees
Replies: 5
Views: 468

Re: Management fees

Welcome to the forum. Bogleheads is heavily skewed towards Do-It-Yourself investors, and there is a high level of prejudice against using advisers. Most of that prejudice is justified, some of it is not. For that 1% fee, what do you get? If it is advice on how to beat the market than that fee is mos...
by alex_686
Sun Oct 07, 2018 7:46 am
Forum: Investing - Help with Personal Investments
Topic: Active vs passive indexing
Replies: 14
Views: 1362

Re: Active vs passive indexing

Your comparisons confuse me because you have too many variables in play. For example, VWILX is a growth fund and VTIAX is not. This is an important difference apart from active vs passive indexing. What are you really asking? Is it about whether to use factors? To extend on this, first, 80% of your...
by alex_686
Fri Oct 05, 2018 6:47 pm
Forum: Personal Finance (Not Investing)
Topic: can i start a private investment firm?
Replies: 70
Views: 5081

Re: can i start a private investment firm?

I more thing about investment clubs. The heights of these things were back in the 50s to 80s. IRAs had not been invented yet, so the fact that were not tax efficient as an IRA was not a big deal. (Investment club assets must be held in taxable.) A group would get together each month at a supper club...
by alex_686
Fri Oct 05, 2018 4:31 pm
Forum: Investing - Help with Personal Investments
Topic: Differences between Index Funds
Replies: 20
Views: 1931

Re: Differences between Index Funds

Welcome to the forum. Bogleheads is named after Mr Bogle, founder of Vanguard. So, yeah, maybe not the most unbiased view here. Most index funds are commodities. They follow a one of the major indexes, they directly replicate the majority of the holdings, and have a low cost basis. If you run a retu...
by alex_686
Fri Oct 05, 2018 1:14 pm
Forum: Personal Finance (Not Investing)
Topic: can i start a private investment firm?
Replies: 70
Views: 5081

Re: can i start a private investment firm?

but people like you can help negate some of these ways of thinking never heard of the investment club before until you brought it up will look into it in more details You may be giving me too much credit. I think you threw a lot of people off their stride by using "firm" and "adviser" which implies...